Accounting and finance is made up of two words: accounting and finance. According to Cruz (2016) on the etymology of accounting, he notes that this word is formed from the noun ‘account’, which has its origins from an old french word called ‘acont’, which has the meaning of terminal payment, reckoning, or account. Also, Cruz (2019) notes that the term acont came from a Latin word ‘computus’ that means calculation. On the other hand, finance has its origins from the old french word ‘finer’ that refers to settling a debt or making an end. Today, the two words have been given different definitions, in that accounting is defined as the daily flow of money in an institution or a company. On the other hand, finance is the general management of liabilities and assets.
Furthermore, other definitions according to Baker (2022) show that finance refers to how an organisation or individual manages, uses, and generates money, while accounting is a process of presenting, interpreting, classifying, and recording financial information. Baker (2022) adds that while accounting involves compiling reports, reconciling cash, recording transactions, and processing receivable and payable accounts, finance involves forecasting, budgeting, lending, borrowing, and investing.
That noted, these two words have been combined to form a course called accounting and finance. Therefore, what is accounting and finance? In simple terms, accounting and finance puts together the concept of business and management with money. Together, University of Aberdeen (2020) notes that finance and accounting cover a wide range of organizational and institutional evaluation, calculation, and reporting. Accounting and finance is made up of several parts that are not limited to business law, financial accounting, taxation, and management accounting, which provide the insights needed in this type of subject.
First, it is made up of business law which is a set of rules that provide guides on how to conduct or operate a business. Second, accounting and finance is made of financial accounting which is the reporting, summarizing, and recording of transactions of a business. Third, it is made of taxation, which is a type of accounting that entails accounting methods and tools used by businesses to avoid penalties and understand their tax liabilities. Forth, there is management accounting which is an accounting method that creates documents, reports, and statements that help in making decisions that are related to the organizational performance.
Accounting and finance can be used in different fields. It can lead to several careers and job pathways. Having a knowledge in accounting and finance can be used in an accountancy firm, where accounting professionals provide their customers with services for financial management. This knowledge can as well be used in banks or insurance companies to make budget, keeping financial records, analyzing performance, preventing theft and fraud, meeting regulations and laws, or developing strategies (Baker, 2022).
To conclude, Finance and accounting work closely together even though they are different, to make sure that a company is able to scale and maintain its operations. For example, being that accounting involves reporting and recording financial information, finance makes use of such information to improve and determine the effectiveness and efficiency of a business’ operation. For instance, finance will use accounting information in creating budgets and analysis of working capital (Baker, 2022).
References
Baker , K. (2022, August 30). The Ultimate Guide to Finance and Accounting. Catalant. https://catalant.com/finance-and-accounting/ultimate-guide-to-finance-and-accounting/#:~:text=Accounting%20is%20the%20process%20ofCruz, V. (2016, September 15). Accounting – definition and… Market Business News; Market Business News. https://marketbusinessnews.com/financial-glossary/accounting-definition-meaning/University of Aberdeen . (2020). Benefits of studying accounting and finance. Www.aberdeen-Isc.ac.uk. https://www.aberdeen-isc.ac.uk/blog/benefits-of-accounting-and-finance
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